- Whilst Cenovus Energy tripled their dividends when rolling out a new shareholder returns policy, it still heavily favors share buybacks.
- I would have preferred to see a greater weighting towards dividends but at least they are translating these triple-digit oil prices into massive free cash flow.
- This should see them reach their C$4b net debt target within twelve months, after which seeing all of their free cash flow directed towards shareholder returns.
- Whilst positive, without these booming oil prices, it would only provide a moderate circa 5.50% shareholder yield after seeing their share price rally almost 30% recently.
- Since this means there is little appeal when oil prices likely revert lower one day in the future, I believe that downgrading to a hold rating is appropriate.
For further details see:
Cenovus Energy: Time To Start Looking For An Exit